To avoid a further worsening in its asset quality, SBI will conduct weekly reviews, and install new technology, to quickly identify loan accounts showing signs of stress, Chairwoman Arundhati Bhattacharya told reporters.
"We will do a better management of what we have and have much better processes in place to pick and choose. We will have much better early warning signals," she said.
SBI posted a 34 per cent drop in third quarter net profits to Rs. 2,234 crore in the quarter ended December, lagging analysts' estimate ofRs. 2,530 crore.
Net interest margins, a key gauge of profitability, were largely unchanged at 3.51 per cent from 3.49 per cent in the preceding quarter.
Gross non-performing loans as a percentage of total assets rose to 5.7 per cent from 5.6 per cent in the previous quarter.
SBI chairwoman Bhattacharya, who took office last October, is under pressure to tame non-performing loans and reverse weakening profit growth while helping to reassure investors who have dragged down the bank's shares by almost half from their peak in November 2010.
Bhattacharya said the bank had restructured outstanding loans worth 561 billion rupees as of the end of December, about 61 per cent higher from a year ago.
Bad debts, however are likely to rise. Last month, India's top private sector lender ICICI Bank warned that corporate defaults would rise in the next few quarters. ICICI posted its slowest profit growth in four years in the December quarter.
SBI Chief Financial Officer R.K. Saraf also said he expected the banking sector's loan problems to linger as India's economy grows at its slowest pace in a decade.
"Mid corporates neither have the resources nor the management bandwidth nor the wherewithal to face a prolonged slowdown like this," Saraf told reporters. "We feel, going forward, this stress will continue for some time."
Ratings agency Fitch expects stressed assets at Indian banks, as well as bad and restructured debt, to total 14 per cent of loans by March 2015, up from 9 per cent in March 2013.